Air NZ confirms loss

By Phil Boeyen, ShareChat Business News Editor

Thursday 29th March 2001

Air New Zealand (NZSE: AIRVA) says it expects to report a substantial operating loss for the full financial year to the end of June.

The announcement comes in the wake of a warning from Qantas yesterday that it is being hit by the competitive market in Australia and the decline of the Aussie dollar.

The Qantas announcement caused a sell-down of Air NZ shares because it signalled that Air NZ-owned Ansett would likely be facing similar problems across the ditch.

Air NZ chairman, Sir Selwyn Cushing, says since the half-year ended December, trading in January and February has deteriorated due to further intense competitive pressures on pricing in the Australian market, along with clear signs of slowing in that economy.

He says the decline in the Australian dollar is also putting added pressure on costs.

"We do not see any relief in these conditions for the balance of the year and therefore expect to report a substantial operating loss for the full year to 30 June 2001," he said in a statement.

"Planning is underway to improve our competitive position beyond this year, including acceleration of the achievement of benefits from our business enhancement programmes and from a range of other initiatives."

For the six months ended December Air NZ made a profit of just $3.8 million, down from $127 million the previous year.

That result was previously foreshadowed by the company when it told the market in November it was under pressure from higher fuel prices, adverse foreign exchange and competition in Australia.

Air NZ shares have been further hit following this morning's announcement, falling in early trading to under $1.10.

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